Break Even Calculator

Contribution Before Fixed Costs

Contribution is the selling price less the variable cost of one unit or service. That amount pays towards fixed costs. Divide contribution by price to find the contribution margin as a percentage.

A positive contribution lets each sale cover part of the fixed costs. When price equals variable cost, each sale leaves nothing for fixed costs. A lower price means each additional sale increases the loss. With zero fixed costs, the target is zero sales.

The break-even point formula is fixed costs divided by contribution per unit. Multiply the unrounded break-even units by the selling price to convert the target to revenue.

With positive fixed costs and zero or negative contribution, no sales volume covers costs. The calculator refuses a finite break-even target in that case.

Enter fixed costs for the period you are planning. For a monthly service target, use monthly fixed costs and the price and variable cost of one service. Count a cost once, either as fixed overhead or as a variable cost.

Use the same GST basis throughout. Exclude GST you collect or recover when it is not business income or cost. Include any unrecoverable GST in the relevant cost.

Revenue and Unit Targets

Break-even units equal fixed costs divided by contribution per unit. The headline rounds up to whole units so the target covers costs. Break-even revenue uses the unrounded quantity, while the second revenue figure uses the whole-unit target.

In this fictional monthly bookkeeping example, fixed costs are $5,200, the service fee is $260 and variable cost is $100 per service. Each service contributes $160. The exact break-even point is 32.5 services and $8,450 of revenue.

The calculator shows a target of 33 units, generating $8,580. Raising the service fee to $300 with costs unchanged reduces the target to 26 services and $7,800 of revenue.

Alternatively, keep the $260 fee and reduce variable cost to $60 per service. Contribution is again $200, so the target is 26 services. Revenue at that target is $6,760. These invented fees are examples, not industry benchmarks.

The Business Victoria break-even formulas explain the relationship between unit prices, costs and sales targets. This model holds price and variable cost constant and covers one service or a consistent sales mix.

Check whether your team can deliver the required volume in the chosen period. Step increases in staffing costs, discounts and a changing sales mix need separate scenarios. Break-even covers the entered costs before income tax and adds no profit target.